Thursday, August 4, 2011

A Recap of Newt's conference call on Dodd-Frank repeal

(I meant to have this up a few hours ago, but a computer error on my part delayed it.)

Wednesday, Newt was on a conference call concerning the repeal of Dodd-Frank, which he is saying is to finance what Obamacare is to health care. He wanted to hear from community bankers and realtors how the legislation -- whose stated purpose was to end "too big to fail" but is actually just making big banks bigger -- is hurting them. Newt said at the beginning of the call that he has been "very surprised how this has bubbled up the past two weeks."

He has mentioned repealing the bill that was passed last year about twenty times the last three weeks -- including on The O'Reilly Factor Monday, Sean Hannity's radio show, and CNBC's Squawk Box Wednesday -- and will give speeches on it in Cedar Rapids, Iowa, Thursday and Des Moines Friday. "With a little bit of help" -- from everyone, not just community bankers and others in the business -- Newt believes the movement for repeal "could grow explosively."

(Newt believes repealing it could happen with the current Senate and President, if done properly. He called for building the case over the next couple of months, have the House repeal it as a jobs issue, and then target those Democrat Senators up for re-election in 2012. He compared it to welfare reform, which President Clinton vetoed twice, and only signed when it was passed the third time on the eve of the election.)

If you go around the country and ask community bankers about the law, they will, Newt said, say that Dodd-Frank is driving down home prices, contributing to the lowest housing prices since the Great Depression. It is also burying the smaller banks under paperwork, killing them off. And Newt then made the Hayekian point that such a central plan is naturally rife for corruption.

The legislation creates, in Newt's words, "bureaucratic socialism," whereby the government leaves the impression that the bank or other entity is still privately owned but control every facet of its' operation through standards and other regulations.

Newt, as well as a couple of the other people on the call, pointed out the bureaucrats tasked with implementing the 2300 page bill are extremely risk-adverse -- to the point, said Newt, that they are threatening to kill the entrepreneurial spirit this country was founded on. The bill was almost doomed from the start because, as Gingrich pointed out, two of the men most responsible for the financial crisis -- Chris Dodd and Barney Frank -- were put in charge of reforming the system. They left Fannie Mae and Freddie Mac -- which were at the heart of the mortgage collapse -- untouched. Gingrich called for "very substantial reform," of them calling the two government-sponsored entities "too large" and "too cumbersome."

A few of the people on the call made the point that Newt is the only 2012 Presidential candidate actively pushing for the repeal of Dodd-Frank. As The American Banker said of Newt last week, "he sounded a lot like a community banker."

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